Successful places with homes and jobs A NATIONAL AGENCY WORKING LOCALLY Housing Finance Conference 20 March 2014 Investing in new homes in 2015 and beyond Jackie Jacob: Affordable Housing, HCA

Contents  General update  Focus on Affordable Homes Programme  Prospectus and bidding round –Continuity, emphasis and changes  Assessment  Timetable and other programmes

Where is the current focus?  20 March 2014  8 working days (including today) to year end  Hockey stick continues to be a feature  A lot to secure between now and year end  Corporate Plan Target to get 27,000 new affordable homes under construction and 25,000 completed in 2013/14

2013/14 Delivery  A strong set of half year statistics published in November –number of homes completed is higher than at same point last year (16,265 compared to 12,218). –starts on site are up significantly across all tenures (12,569; +121% compared to same point last year)  HCA currently on track to meet 2013/14 core targets  Continued support of partners is key

Spending Round 2015/16  Good settlement for the sector  Reflects confidence in sector and HCA  Housing positioned alongside other infrastructure as driver of economic growth –£2.9bn Affordable Homes Programme –£400m Rent to Buy scheme –£202m for Local Infrastructure Fund (EZ and Large sites –£160m Decent Homes Backlog –Guideline rent limit of CPI+1% Speed of delivery is vital to maximise the impact of this investment on the economy.

Budget 2014

Affordable Homes Programme recap  £2.9bn funding for affordable housing over period announced in Spending Round (June 2013)  along with confirmation of rents beyond 2015: 10 years - CPI plus 1%  HCA Prospectus published 27 January 2014  Bids due 30 April 2014 (funding outside London - £1.7bn)  No pre-set split of funding across areas

Affordable Homes Programme  Bids can include: –Hostel accommodation –Travellers’ pitches –Former empty properties brought back into use as affordable housing  RPs, LAs, housebuilders can bid – partnership working strongly encouraged (access capacity)  Supported, elderly and rural housing encouraged

Affordable Homes Programme  Builds on current programme –AHP moved to different funding model based on greater utilisation of RP own resources (Current programme on target to deliver contribution to 170,000 new affordable homes over SR period) –Affordable Rent product (and shared ownership)

Affordable Homes Programme – funding model  Sources of cost contribution: –Borrowing against new Affordable Rent, conversions –Disposals (asset management) –Use of Recycled Capital Grant Fund and Disposal Proceeds Fund –Cross subsidy (eg from market sale) –Free or discounted land –Access to guarantees –Grant (no pre-set grant rate)  ‘Something for something’: flexible (and efficient) use of assets – conversions (social rent to affordable rent or shared ownership) and disposals.

Affordable Homes Programme  New homes meet local needs (including one and two beds)  Approach to driving efficient procurement and construction innovation  Design and quality – 13 March written Ministerial Statement on outcome of the Technical Standards : majority of proposals from the review will become part of building standards  addendum published to the prospectus shortly  Demolition: Ministers have expressed strong preference for refurbishment rather than demolition of housing. Priority for the AHP is NEW SUPPLY.

Affordable Homes Programme – some changes  Changes built on experience and provider feedback:  Up to 75% allocated via initial bid round, balance via further market engagement  Two routes for delivery: 1.Mixed (indicative and firm schemes) – based on proven delivery performance 2.Firm scheme only route  Remove average payment rate (facilitate partnership working)

Context and learning from current programme  Understanding of wider context: –Welfare reform, accounting changes, –Boards consider bidding strategy in context of well governed and financially viable organisations; organisational aims; other options –Strong focus on efficiency and making best use of assets  Holding back funding for further market engagement –Recognise how development opportunities arise –Some will need longer to work up firm scheme proposals –  Mix of indicative and firm –Seek to reward delivery performance, but not encourage competition for schemes (and driving up prices) –Clearer milestones on delivery of indicative schemes – mitigate impact of end date; opportunities to re-allocate slippage  Earlier confirmation of allocations – make use of longer lead in time for new programme  Remove complexity wherever possible (average payment rate)

Assessment – key points  Assessment against: –Fit with local need –Value for money (50%) – comparators across bids and current programme –Deliverability (50%) –Meet the regulator’s viability and governance standard  HCA will verify fit with local authorities  Programme building: schemes ranked based on value for money and deliverability; ranked bids reviewed to identify gaps

Timetable  Close of bid round: 30 April  Assessment and moderation of bids: beginning of May to 30 June  Clearance of recommendations for allocation: beginning of July  Announcement of successful allocations: late July